We Can Make America’s Greatest Anti-Poverty Tools Even Better
By Fran Rosebush, CFED
For millions of hard-working, low-income taxpayers, 2015 ended with a huge victory. As one of its final acts last year, Congress passed a law that made permanent key provisions of three tax credits aimed at low- and moderate-income workers: the Earned Income Tax Credit (EITC), Child Tax Credit (CTC) and American Opportunity Tax Credit (AOTC). These tax credits are some of the most powerful anti-poverty tools we have, and their recent expansions will impact nearly 16 million people in hard-working families to cover their basic expenses and begin to create a foundation of savings to build stronger financial security in their lives. The new law also increased funding for the Volunteer Income Tax Assistance (VITA) program by 25%, greatly expanding the capacity of community tax preparation sites to connect low-wage taxpayers with these important credits. These successes came as the result of years of successful advocacy by service providers and other stakeholders across the country. As we finish celebrating this victory for low-wage workers, now is the time ask, what’s next?
Today, on EITC Awareness Day, CFED and the Taxpayer Opportunity Network are working to ensure the dialogue doesn’t stop here. We’re partnering with key allies, supporting local communities, raising awareness about these critical anti-poverty tax programs and working together to ensure effective policy reforms that support low-income and working families as they build their financial security. This morning, we hosted an event with Tax Credits for Working Families on Capitol Hill to hear from key decision-makers about the future of tax credits for low-wage workers. The event—keynoted by Sen. Cory Booker (D-NJ) and Johns Hopkins University Distinguished Professor Kathryn Edin—brought together legislators, advocates, tax practitioners, scholars and taxpayers to share their knowledge and first-hand experience with refundable tax credits, while addressing what the recent tax deal means and what can be done to improve tax programs even more.
Many of our local partners and members of the Taxpayer Opportunity Network are also working to bring awareness of the EITC in their communities to ensure every eligible taxpayer is aware of the credit—and of the free, high-quality tax preparation services available at VITA sites. These partners are hosting press conferences and briefings at their state capitols, bringing key stakeholders to visit VITA sites and more. For example, Goodwill Industries of Greater Sacramento Valley & Northern Nevada hosts an annual event at an AARP tax preparation site to raise awareness about the EITC with local taxpayers. CA$H Maine sets up information tables with resources about EITC and VITA for legislators to peruse at the state capitol. And Prepare + Prosper in Minnesota is working with the financial empowerment department in one of their state’s most populous counties, Dakota County, to share resources about EITC and VITA with county employees.
Here are a few ways you can support further improvements to these tax credits:
- Promote EITC Awareness Day in your community by using this social media toolkit.
- Advocate for the expansion of the federal EITC. Learn about efforts to expand the EITC for childless workers and help all EITC recipients build emergency savings through the Rainy Day EITC program. If your organization would like to endorse the proposal, please contact CFED’s Ezra Levin (firstname.lastname@example.org).
- Promote adoption and expansion of state EITC programs. As we document in the newly released Assets & Opportunity Scorecard, 26 states and the District of Columbia have adopted EITCs that add to what the federal credit puts in the pockets of low-income taxpayers. Check out these policy briefs on what states can do.
- Promote EITC outreach efforts in your community to increase the uptake of these credits by those who can benefit the most. Nearly 20% of workers eligible for the tax credits don’t receive them each year because they lack awareness or have been misinformed.
- Explore your own free tax filing options, including VITA, IRS Free File and MyFreeTaxes.